(ii) if the investment contract does not contain any confidential
information, any information to which paragraph 3(3)
applies and which the Secretary of State considers it
appropriate to exclude.

(5) 5A statement falls within this sub-paragraph if it is a statement—

(a) that the Secretary of State considers that payments falling within
paragraph 1(1)(c) which would be made under the contract would
encourage low carbon electricity generation,

(b) that the Secretary of State considers that without the contract there is
10a significant risk that the electricity generation to which the contract
relates will not occur or will be significantly delayed, and

(c) summarising the regard that the Secretary of State has had, in
deciding to enter the contract, to the matters set out in subsection (2)
of section 1.

(6) 15In sub-paragraph (5) “low carbon electricity generation” means electricity
generation which in the opinion of the Secretary of State will contribute to a
reduction in emissions of greenhouse gases; and “greenhouse gas” has the
meaning given by section 92(1) of the Climate Change Act 2008.

(7) The Secretary of State must publish an investment contract in the form in
20which it was laid before Parliament as soon as reasonably practicable after it
is laid.

Varied investment contract

2 (1) An investment contract is a “varied investment contract” for the purposes of
this paragraph if the variation—

(a) 25is agreed at any time before or after this Schedule comes into force,
and

(b) will, in the opinion of the Secretary of State, materially increase the
likely cost to consumers of electricity.

(2) A varied investment contract is an “investment contract” for the purposes of
30this Schedule only if it is laid before Parliament (at any time after the
introduction into Parliament of the Bill that becomes this Act)—

(a) with a statement of why, having regard to the likely cost to
consumers of electricity, the Secretary of State believes that the
variation is appropriate, and

(b) 35after the Secretary of State has excluded from it—

(i) any confidential information (see paragraph 3), or

(ii) if the varied investment contract does not contain any
confidential information, any information to which
paragraph 3(3) applies and which the Secretary of State
40considers it appropriate to exclude.

(3) The Secretary of State must publish a varied investment contract in the form
in which it was laid before Parliament as soon as reasonably practicable after
it is laid.

(4) This paragraph does not apply in respect of a variation which is made in
45accordance with the terms of an investment contract.

Confidential information

3 (1) For the purposes of paragraphs 1 and 2, “confidential information” means
specified information to which sub-paragraph (3) applies and in relation to
which it is an initial term of the contract that it should not be disclosed.

(2) 5For the purposes of sub-paragraph (1)—

(a) a term is an initial term if it is agreed at the time the investment
contract is entered into or, in relation to a varied investment contract,
at the time the variation is agreed;

(b) “specified” means specified in the initial term.

(3) 10This sub-paragraph applies to information if it is—

(a) not the strike price or the reference price;

(b) information which, in the opinion of the Secretary of State at the time
the initial term is agreed, constitutes a trade secret;

(c) information the disclosure of which, in the opinion of the Secretary
15of State at that time, would or would be likely to prejudice the
commercial interests of any person;

(d) information the disclosure of which would, in the opinion of the
Secretary of State at that time, constitute a breach of confidence
actionable by any person.

20Interpretation for the purposes of this Schedule

4 (1) In this Schedule—

• “CFD” is to be construed in accordance with section 2(2);

• “CFD counterparty” is to be construed in accordance with section 3(2);

• “electricity supplier”, subject to any provision made by regulations,
  25means a person who is a holder of a licence to supply electricity
  under—

  (a)

  section 6(1)(d) of EA 1989, or

  (b)

  Article 10(1)(c) of the Electricity (Northern Ireland) Order
  1992 (S.I. 1992/231 (N.I.1)S.I. 1992/231 (N.I.1));

• 30“investment contract counterparty” is to be construed in accordance
  with paragraph 5;

• “national system operator” means the person operating the national
  transmission system for Great Britain (and for this purpose
  “transmission system” has the same meaning as in EA 1989 - see
  35section 4(4) of that Act);

• “regulations” means regulations made under paragraph 6.

(2) References in this Schedule to a CFD counterparty (apart from the reference
in paragraph 9(1)(c), 9(1)(d) and 16) are to a CFD counterparty acting as a
counterparty in relation to an investment contract (where any property,
40rights or liabilities under the contract have been transferred to the CFD
counterparty by a scheme under paragraph 16).

Investment contract counterparty

5 (1) The Secretary of State may by order made by statutory instrument designate
an eligible person to be a counterparty for investment contracts.

(2) 45A person may be designated if the person is—

(a) a company formed and registered under the Companies Act 2006, or

(b) a public authority, including any person any of whose functions are
of a public nature.

(3) A designation may be made only with the consent of the person designated.

(4) 5More than one designation may have effect under this paragraph.

(5) A designation ceases to have effect if—

(a) the Secretary of State by order made by statutory instrument revokes
the designation, or

(b) the person withdraws consent to the designation by giving not less
10than 28 days’ notice in writing to the Secretary of State.

(6) As soon as reasonably practicable after a designation ceases to have effect
the Secretary of State must make a transfer scheme under paragraph 16 to
ensure the transfer of all rights and obligations under any investment
contract to which the person who has ceased to be an investment contract
15counterparty was a party.

(7) If necessary for the purposes of a transfer scheme required to be made by
virtue of sub-paragraph (6), the Secretary of State must, so far as reasonably
practicable, exercise the power to designate so as to ensure that at least one
designation has effect under this paragraph.

(8) 20Regulations may include provision about the period of time for which, and
the circumstances in which, a person who has ceased to be an investment
contract counterparty is to continue to be treated as an investment contract
counterparty for the purposes of the regulations.

Part 2 25Regulations: general

Regulations for the purposes of investment contracts

6 (1) The Secretary of State may by regulations make further provision about or
in connection with investment contracts.

(2) The provision which may be made by regulations includes, but is not limited
30to, the provision described in this Schedule.

(3) Regulations may—

(a) include incidental, supplementary and consequential provision;

(b) make transitory or transitional provision or savings;

(c) make different provision for different cases or circumstances or for
35different purposes;

(d) make provision subject to exceptions.

(4) Regulations are to be made by statutory instrument.

(5) An instrument containing regulations which make provision falling within
paragraph 7 or 8 (whether or not also making any other provision) may not
40be made unless a draft of the instrument has been laid before, and approved
by a resolution of, each House of Parliament.

(6) Any other instrument containing regulations is subject to annulment in
pursuance of a resolution of either House of Parliament.

Supplier obligation

7 (1) Regulations may make provision for electricity suppliers to pay the Secretary of
State, an investment contract counterparty or a CFD counterparty for the purpose
of enabling payments to be made under investment contracts.

(2) 5Regulations may make provision for electricity suppliers to pay the Secretary of
State, an investment contract counterparty or a CFD counterparty for the purpose
of enabling the person to whom the payments are made—

(a) to meet such other descriptions of costs as the Secretary of State considers
appropriate;

(b) 10to hold sums in reserve;

(c) to cover losses in the case of insolvency or default of an electricity supplier.

(3) Regulations may make provision to require electricity suppliers to provide financial
collateral to the Secretary of State, an investment contract counterparty or a CFD
counterparty (whether in cash, securities or any other form).

(4) 15Provision made by virtue of this paragraph may include provision for—

(a) the Secretary of State, an investment contract counterparty or a CFD
counterparty to determine the form and terms of any financial
collateral;

(b) the Secretary of State, an investment contract counterparty or a CFD
20counterparty to calculate or determine, in accordance with such
criteria as may be provided for by or under the regulations, amounts
which are owed by an electricity supplier or are to be provided as
financial collateral by an electricity supplier;

(c) the issuing of notices by the Secretary of State, an investment
25contract counterparty or a CFD counterparty to require the payment
or provision of such amounts;

(d) the enforcement of obligations arising under such notices.

(5) Provision made by virtue of sub-paragraph (4)(b) may provide for anything
which is to be calculated or determined under the regulations to be
30calculated or determined by such persons, in accordance with such
procedure and by reference to such matters and to the opinion of such
persons, as may be specified in the regulations.

(6) Provision made by virtue of sub-paragraph (4)(d) may include provision—

(a) about costs;

(b) 35about interest on late payments under notices;

(c) about references to arbitration;

(d) about appeals.

Payments to electricity suppliers

8 Regulations may make provision about the amounts which must be paid by
40the Secretary of State, an investment contract counterparty or a CFD
counterparty to electricity suppliers.

Application of sums

9 (1) Regulations may make provision for apportioning sums—

(a) received by the Secretary of State, an investment contract
counterparty or a CFD counterparty from electricity suppliers under
provision made by virtue of paragraph 7;

(b) received by the Secretary of State, an investment contract
5counterparty or a CFD counterparty under an investment contract,

(c) received by a CFD counterparty from electricity suppliers under
provision made by virtue of section 5;

(d) received by a CFD counterparty under a CFD,

in circumstances where the Secretary of State, an investment contract
10counterparty or a CFD counterparty is unable fully to meet obligations
under an investment contract or a CFD.

(2) Provision made by virtue of sub-paragraph (1) may include provision about
the meaning of “unable fully to meet obligations under an investment
contract or a CFD”.

(3) 15Regulations may make provision about the application of sums held by the
Secretary of State, an investment contract counterparty or a CFD
counterparty.

(4) Provision made by virtue of sub-paragraph (3) may include provision that
sums are to be paid, or not to be paid, into the Consolidated Fund.

20Information and advice

10 (1) Regulations may make provision about the provision and publication of
information.

(2) Provision made by virtue of sub-paragraph (1) may include provision—

(a) for the Secretary of State to require the national system operator to
25provide advice to the Secretary of State;

(b) for the Secretary of State to require an investment contract
counterparty, a CFD counterparty, the Authority, the Northern
Ireland Authority for Utility Regulation or the Northern Ireland
system operator to provide advice to the Secretary of State or any
30other person specified in the regulations;

(c) for the Secretary of State to require an investment contract
counterparty, a CFD counterparty, the national system operator,
electricity suppliers, the Authority, the Northern Ireland Authority
for Utility Regulation, the Northern Ireland system operator or a
35generator who is party to an investment contract to provide
information to the Secretary of State or any other person specified in
the regulations;

(d) for the national system operator to require information to be
provided to it by an investment contract counterparty, a CFD
40counterparty, a generator who is party to an investment contract or
the Northern Ireland system operator;

(e) for an investment contract counterparty or a CFD counterparty to
require information to be provided to it by electricity suppliers or the
Northern Ireland system operator;

(f) 45for the classification and protection of confidential or sensitive
information;

(g) for the enforcement of any requirement imposed by virtue of
paragraphs (a) to (f).

(3) In sub-paragraph (2) “Northern Ireland system operator” means the holder
of a licence under Article 10(1)(b) of the Electricity (Northern Ireland) Order
1992 (S.I. 1992/231 (N.I.1)S.I. 1992/231 (N.I.1)).

(4) The prohibition on disclosure of information by—

(a) 5section 105(1) of the Utilities Act 2000;

(b) Article 63(1) of the Energy (Northern Ireland) Order 2003 (S.I. 2003/
419 (N.I.6));

does not apply to a disclosure required by virtue of this paragraph.

Investment contracts: functions of the Authority

11 10Regulations may make provision conferring functions on the Authority for
the purpose of offering advice to, or making determinations on behalf of, a
party to an investment contract.

Enforcement

12 (1) Regulations may include provision for requirements under the regulations
15to be enforceable—

(a) by the Authority as if they were relevant requirements on a regulated
person for the purposes of section 25 of EA 1989;

(b) by the Northern Ireland Authority for Utility Regulations as if they
were relevant requirements on a regulated person for the purposes
20of Article 41A of the Energy (Northern Ireland) Order 2003 (S.I 2003/
419 (N.I. 6)).

(2) Provision made by virtue of sub-paragraph (1)(b) may be made in relation
only to the enforcement of requirements imposed on the holder of a licence
under Article 10(1)(c) of the Electricity (Northern Ireland) Order 1992 (S.I.
251992/231 (N.I.1)).

Consultation

13 (1) Before making regulations the Secretary of State must consult—

(a) the Scottish Ministers,

(b) the Welsh Ministers,

(c) 30the Department of Enterprise, Trade and Investment, and

(d) such other persons as the Secretary of State considers it appropriate
to consult.

(2) Before making regulations which contain provision falling within
paragraph 7, 8 or 14(2), the Secretary of State must also consult electricity
35suppliers.

(3) Before making regulations which contain provision falling within
paragraph 9, the Secretary of State must also consult electricity suppliers and
any electricity generator who is party to an investment contract.

(4) Before making regulations which contain provision falling within
40paragraph 11 or 12(1)(a), the Secretary of State must also consult the
Authority.

(5) Before making regulations which contain provision falling within
paragraph 12(1)(a), the Secretary of State must also consult any person who
is a holder of a licence under section 6(1)(d) of EA 1989.

(6) Before making regulations which contain provision falling within
paragraph 12(1)(b), the Secretary of State must also consult the Northern
Ireland Authority for Utility Regulation and any person who is a holder of a
licence under Article 10(1)(c) of the Electricity (Northern Ireland) Order 1992
5(S.I. 1992/231 (N.I.1)S.I. 1992/231 (N.I.1)).

(7) If regulations impose requirements by virtue of paragraph 10(2), the
Secretary of State must before making the regulations also consult any
person upon whom a requirement is imposed.

(8) The requirement to consult may be satisfied by consultation before, as well
10as consultation after, the passing of this Act.

Part 3 Further provision about an investment contract counterparty and a CFD
counterparty

Duties of an investment contract counterparty and a CFD counterparty

14 (1) 15An investment contract counterparty and a CFD counterparty must act in
accordance with—

(a) any direction given by the Secretary of State by virtue of this
Schedule;

(b) any provision included in regulations.

(2) 20Regulations may make provision—

(a) to require an investment contract counterparty or a CFD
counterparty to enter into arrangements or to offer to contract for
purposes connected to an investment contract;

(b) specifying things that an investment contract counterparty or a CFD
25counterparty may or must do, or things that an investment contract
counterparty or CFD counterparty may not do;

(c) conferring on the Secretary of State further powers to direct an
investment contract counterparty or CFD counterparty to do, or not
to do, things specified in the regulations or the direction.

(3) 30Provision made by virtue of sub-paragraph (2)(b) or (c) includes provision
requiring consultation with, or the consent of, the Secretary of State in
relation to—

(a) the enforcement of obligations under an investment contract;

(b) a variation or termination of an investment contract;

(c) 35the settlement or compromise of a claim under an investment
contract;

(d) the conduct of legal proceedings relating to an investment contract;

(e) the exercise of rights under an investment contract.

Shadow directors, etc.

15 40The Secretary of State is not, by virtue of the exercise of a power conferred
by or by virtue of this Schedule, to be regarded as—

(a) a person occupying in relation to an investment contract
counterparty or a CFD counterparty the position of director;

(b) being a person in accordance with whose directions or instructions
the directors of an investment contract counterparty or a CFD
counterparty are accustomed to act;

(c) exercising any function of management in an investment contract
5counterparty or a CFD counterparty;

(d) a principal of an investment contract counterparty or a CFD
counterparty.

Part 4 Transfers

10Transfers

16 (1) The Secretary of State may make one or more schemes for the transfer of
designated property, rights or liabilities under an investment contract—

(a) from the Secretary of State (“the transferor”) to a CFD counterparty
(“the transferee”);

(b) 15from the Secretary of State (“the transferor”) to an investment
contract counterparty (“the transferee”);

(c) from an investment contract counterparty (“the transferor”) to a CFD
counterparty (“the transferee”);

(d) from a person who has ceased to be an investment contract
20counterparty (“the transferor”) to a person who is an investment
contract counterparty (“the transferee”).

(2) If a scheme transfers liabilities under an investment contract regulations
must make provision under paragraph 7(1) or section 5(1) for the purpose of
enabling payments to be made under the contract.

(3) 25If a scheme provides for a CFD counterparty to be the transferee, regulations
may provide, to any extent considered appropriate by the Secretary of State,
for the investment contract to be treated as a CFD for the purposes of
provision made by or by virtue of Chapter 2 of this Act.

(4) On the transfer date, the designated property, rights and liabilities are
30transferred and vest in accordance with the scheme.

(5) The rights and liabilities that may be transferred by a scheme include those
arising under or in connection with a contract of employment.

(6) A certificate by the Secretary of State that anything specified in the certificate
has vested in any person by virtue of a scheme is conclusive evidence for all
35purposes of that fact.

(7) In this paragraph and paragraph 17—

• “designated”, in relation to a scheme, means specified in or determined
  in accordance with the scheme;

• “property” includes interests of any description;

• 40“the transfer date” means a date specified by a scheme as the date on
  which the scheme is to have effect.

17 (1) A scheme may make provision—

(a) for anything done by or in relation to the transferor in connection
with any property, rights or liabilities transferred by the scheme to

be treated as done, or to be continued, by or in relation to the
transferee;

(b) for references to the transferor in any agreement (whether written or
not), instrument or other document relating to any property, rights
5or liabilities transferred by the scheme to be treated as references to
the transferee;

(c) about the continuation of legal proceedings;

(d) for transferring property, rights or liabilities which could not
otherwise be transferred or assigned;

(e) 10for transferring property, rights and liabilities irrespective of any
requirement for consent which would otherwise apply;

(f) for preventing a right of pre-emption, right of reverter, right of
forfeiture, right to compensation or other similar right from arising
or becoming exercisable as a result of the transfer of property, rights
15or liabilities;

(g) for dispensing with any formality in relation to the transfer of
property, rights or liabilities by the scheme;

(h) for transferring property acquired, or rights or liabilities arising,
after the scheme is made but before it takes effect;

(i) 20for apportioning property, rights or liabilities;

(j) for creating rights, or imposing liabilities, in connection with
property, rights or liabilities transferred by the scheme;

(k) for requiring the transferee to enter into any agreement of any kind,
or for a purpose, specified in or determined in accordance with the
25scheme.

(2) Sub-paragraph (1)(b) does not apply to references in primary legislation or
in subordinate legislation.

18 A scheme may contain provision for the payment of compensation by the
Secretary of State to any person whose interests are adversely affected by it.

30Part 5 Supplementary

Licence modifications

19 (1) The Secretary of State may modify—

(a) a condition of a particular licence under section 6(1)(a), (b) or (c) of
35EA 1989 (generation, transmission and distribution licences);

(b) the standard conditions incorporated in licences under that
provision by virtue of section 8A(1A) of that Act;

(c) a document maintained in accordance with the conditions of licences
under that provision, or an agreement that gives effect to a document
40so maintained.

(2) The Secretary of State may make a modification under sub-paragraph (1)
only for the purpose of—

(a) allowing or requiring services to be provided to the Secretary of
State, an investment contract counterparty or a CFD counterparty;

(b) 45enforcing obligations under an investment contract.

(3) Provision included in a licence, or in a document or agreement relating to
licences, by virtue of the power under sub-paragraph (1) may in particular
include provision of a kind that may be included in regulations.

(4) Before making a modification under this paragraph, the Secretary of State
5must consult—

(a) the Scottish Ministers,

(b) the Welsh Ministers,

(c) the holders of any licence being modified,

(d) electricity suppliers,

(e) 10the Department of Enterprise, Trade and Investment,

(f) the Authority, and

(g) such other persons as the Secretary of State considers it appropriate
to consult.

(5) Sub-paragraph (4) may be satisfied by consultation before, as well as by
15consultation after, the passing of this Act.

Expenditure

20 (1) There may be paid out of money provided by Parliament expenditure incurred by the
Secretary of State for the purpose of making payments in respect of the Secretary of
State’s obligations under an investment contract, whether entered into before or
20after this Schedule comes into force.

(2) There may be paid out of money provided by Parliament expenditure incurred by the
Secretary of State for the purpose of, or in connection with—

(a) obtaining advice and assistance in relation to investment contracts
(including in relation to entering into an investment contract);

(b) 25the establishment of an investment contract counterparty;

(c) making payments or providing financial assistance to an investment
contract counterparty.

(3) Financial assistance or payments includes financial assistance or payments given
subject to such conditions as may be determined by, or in accordance with
30arrangements made by, the Secretary of State; and such conditions may in particular
in the case of a grant include conditions for repayment in specified circumstances.

(4) In this paragraph, “financial assistance” means grants, loans, guarantees or
indemnities, or any other kind of financial assistance.

Section 38

SCHEDULE 4 35Application and modification of emissions limit duty

Application of duty: changes to main boilers

1 (1) Regulations under section 38(6)(b) may provide for the emissions limit duty
to apply (with or without modifications) in relation to fossil fuel plant in
cases where—

(a) 40immediately before the day on which section 38(1) came into force,
the electricity generating station in question was the subject of a
relevant consent, and